Nature News

2024 kicks off with major developments in the nature space, a momentum which is likely to continue and out-pace other ESG trajectories. Perhaps you, like us, are grappling with the sheer volume of nature related developments here in Oceania and globally. We, the EY Climate Change and Sustainability Service (CCaSS) team, have set up this news bulletin as a way to keep track of the rapid updates across emerging regulations, reporting trends, science and business actions on nature loss.

This update has been prepared with Miguel Castillo Madeleine Deacon and Levin Balakrishnan .

It has been a busy start to the year in the nature space, demonstrating what many in the sustainability field have started to notice; the trajectory of action and reporting on nature is quickly outpacing the climate trajectory we have observed over the past decade.

Presented below is the first wave of updates for 2024, covering January and February. Keep an eye out for more regular updates that we will be sharing on LinkedIn, as the nature space will undoubtedly continue to evolve rapidly this year.

Developments in the nature reporting and regulatory landscapes have been particularly notable since the beginning of the year. For example, several new geographies including China and Switzerland have announced ESG reporting and risk management schemes which capture nature risks, a new GRI Standard has been released on biodiversity, and the TNFD announced its early adopters . Mandatory reporting requirements are increasing, and voluntary reporting frameworks are gaining traction and becoming more developed, which means that companies looking to report on nature topics have more choice and guidance but also more pressure to do so.

In the regulatory space, some pushback has been seen in Europe on nature-related laws and initiatives, include the French government ceding to farmer lobbies against nature laws and a delegate of the UK government stating that nature cannot have rights at a UN assembly. These updates reflect the fact that nature is increasingly a topic of debate among governments. Emerging nature regulations will likely present culturally difficult questions, challenges for application, and varied interpretations between geographies. Nevertheless, the EU continues to lead the charge on legislation requiring EU member states to restore at least 30% of habitats from poor to good condition by 2030, and increasing to 60% by 2040 and 90% by 2050. Further, the EU Parliament has voted to criminalise environmental damage, particularly illegal logging, as “ecocide”; requiring EU country members to put the updated directive in national law within two years. These new regulations will have direct implications to organisations operating in the EU, whilst sending a message to other countries on how legislation can be used to protect and restore ecosystems.

While environmental regulations could be a contentious point, we anticipate that the debate on striking the right balance of regulations and market-based approaches for restoring nature will continue. For example, industry collaboration, demonstrated by the International Council of Mining and Metals (ICMM) , has resulted in setting out five-point plan for achieving nature positive by 2030, including achieving no net loss of biodiversity at mine sites. Importantly, efficient and inclusive stakeholder consultation should be considered; particularly when engaging with Indigenous Peoples and Local communities.

The World Economic Forum identified biodiversity loss as the third greatest global risk in the next ten years, demonstrating again the urgency for organisations to understand and act on their nature risks and dependencies. However, scientific developments continue to offer hope and solutions, including new methodologies for measuring biodiversity impacts emerging in Singapore , and a new study which found that tidal ecosystems can sequester up to twice the amount of carbon as previously thought. These developments highlight how crucial investment into nature-based solutions and research is to enable both the climate and nature crises to be addressed.

Reporting

• China Stock Exchange announces mandatory ESG reporting: Three of China’s major stock markets have announced new sustainability reporting guidelines for listed companies, which will require larger cap and dual-listed companies to disclose on a wide range of ESG topics from 2026. The requirement will capture hundreds of companies, and a double materiality approach will be adopted to include reporting on the risks and impacts of sustainability issues such as climate change, biodiversity loss, supply chain security, anti-corruption and more.
• Switzerland introduces risk management requirements over nature and climate risks for financial institutions: the Swiss Financial Market Supervisory Authority (FINMA) has released a circular which sets out the risk management requirements for financial institutions in regards to financial risks from climate change and nature degradation. Te requirements include criteria for assessing materiality of risks and scenario analysis. A public consultation on the circular is open until 31 March 2024. The requirements will take effect from 1 January 2025.
• Revisions to the GRI Biodiversity Standard: The Global Reporting Initiative (GRI) have published GRI 101: Biodiversity 2024 which replaces GRI 304: Biodiversity 2016. The revised Standard now better reflects the significant international developments that have occurred over the past few years, including the UN Kunming-Montreal Global Biodiversity Framework (GBF), the Science Based Target Network (SBTN) and the TNFD. GRI have also published GRI 14: Mining Sector 2024 which addresses the dual challenge of tackling environmental and social impacts while continuing to provide essential resources.
• TNFD early adopters: ?The Task-force on Nature-related Financial Disclosures (TNFD) announced early adopters of its recommendations, including over 100 banks globally, twelve Australian-based companies and one in New Zealand. Leading the pack was Japan with 80 early adopters, and the UK with 46.
• EFRAG and TNFD sign a cooperation agreement to further advance Nature-related Reporting: The European Financial Reporting Advisory Group (EFRAG) and the TNFD have signed a cooperation agreement, signifying a commitment to expanding nature-related reporting through the alignment of the TNFD framework with the European Sustainability Reporting Standards (ESRS) disclosures. A map of the interoperability of the two frameworks will be published in early 2024.
• TNFD launches guidance for biotechnology and pharmaceuticals industries: This sector-specific guidance has been published by the TNFD to aid uptake of its reporting framework across key industries. The TNFD is seeking feedback and will finalise the guidance by June.
• Comparison of nature disclosure frameworks published: The United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and the United Nations Environment Programme Finance Initiative (UNEP FI) have published a report describing the key methodological and conceptual trends among disclosure approaches for nature-relates issues. It provides comparison on seven leading standards and frameworks for nature reporting, including GRI, TNFD and the Natural Capital Protocol.

Regulation and legal

• Australia’s mandatory reporting legislation: Australia’s Treasury released an exposure draft legislation for its Australian Sustainability Reporting Standards (ASRS). The ASRS will aim to align closely with the International Sustainability Standards Board’s (ISSB) IFRS Sustainability disclosure standards. The IFRS Standards include nature-related reporting, and the Australian government has indicated that it will closely monitor international developments and potentially develop further globally-aligned sustainability reporting schemes, possibly including nature reporting.
• France to push back on EU nature laws: Farmers in France have been lobbying to change the EU’s Nature Restoration Law, arguing that it is giving competitors an unfair advantage. In particular, the obligation that 4% of farmland must remain unused is seen as cutting into productivity of agricultural land. The French government has agreed to seek softer obligations and more pro-farming policies.
• Legal action against New Zealand’s largest emitters: Iwi leader Mike Smith has won the right to sue seven of the country’s big polluters including agriculture, infrastructure and energy companies. The case will be heard in court, setting a precedent as tort law has previously not been used for such claims.
• UK government delegate opposes rights for nature at UN assembly: During a preliminary negotiations debate for the UN environment assembly in Nairobi, a UK government delegate opposed the core principle of a draft resolution by Bolivia, which referred to the rights of nature. The delegate stated that, although the UK wants to advance environmental goals, its firm position is that rights can only be held by legal entities and cannot be applied to nature. The view was met with sharp criticism by legal scholars.
• EU nature restoration law to restore degraded ecosystem in member states : Under a new EU law, member states must restore at least 30% of habitats covered by the law from a poor to good condition by 2030, which will increase to 60% by 2040 and 90% by 2050. After being restored, member states must make sure that the ecosystems do not significantly deteriorate. The new law stipulates that for agricultural ecosystems, EU member states will have to make progress in two of three indicators: grassland butterfly index, the share of agricultural land with high-diversity landscape features, and the stock of organic carbon in cropland mineral soil. For other ecosystems, the law also stipulates that an additional three billion trees are to be planted and member states having to restore at least 25 000 km of rivers into free-flowing rivers.

EU Parliament moves forward to criminalise most serious cases of ecosystem destruction: Serious cases of ecosystem destruction have been criminalised by the EU with tougher penalties and prison sentences through an updated directive. Serious environmental crimes that include illegal logging and habitat loss can now result in CEOs being sentenced up to eight years in prison, or 10 years if they cause the death of a person as a result of the new directive. EU member states now have two years to enshrine the directive in law.

Science and insights

• Biodiversity loss is the third greatest global risk: The World Economic Forum has published the 22 edition of its Global Risks Report , which found that of the top five global risks in the next 10 years, four are environmental. Biodiversity loss and ecosystem collapse was the third greatest risk in this timeframe. Private sector responders saw biodiversity loss as a longer term risk, while civil society and government responders prioritised it over a shorter timeframe, demonstrating the dissonance of thinking between key decision makers.
• The UNEP names ecosystem restoration initiatives as Un World Restoration Flagships : Seven ecosystem restoration initiatives from Africa, Latin America, the Mediterranean and South Asia have been selected as UN World Restoration Flagships due to their exemplery performance as large-scale, long-ter restoration projects which have great restoration as well as job creation and broader economic potential. These initiatives together will restore 40 million hectares and create around 500,000 jobs, and will be eligible for financial and technical support from the UN.
• Tidal ecology provides greater carbon sinks than previously known: New research from the University of Gotheburg has demonstrated that mangroves and saltmarshes sequester up to twice the amount of carbon than previously thought. Carbon is stored in the muddy soils and biomass of these ecosystems and converted to bicarbonate, which is used by shellfish and coral species to build hard shells. This interaction is an essential ecological process as well as a climate mitigant, and demonstrates the value of investment into blue carbon initiatives.
• New methods emerging for estimating biodiversity loss: Scientists at the National University of Singapore have utilised new statistical methods to examine biodiversity loss in Singapore over the past two-hundred years. The study identifies the impact of deforestation and urban development, estimating that 37% of species have been lost.

Business

• Business’ reporting progress: Nature loss poses risks to over half of the world's GDP ($44 trillion). Despite this, Edie's Sustainable Business Tracker Report found that only 33% of surveyed corporations consider biodiversity as 'business critical'. Concerningly, this is not too far behind the 54% of businesses that believe developing a climate transition plan is a high priority. Only four respondants out of 237 were hopeful about addressing biodiversity, including develop nature-positive targets and strategies witin the next 12 months.
• Leading mining and metals companies commit to nature positive: Members of the International Council of Mining and Metals (ICMM), representing a third of the global industry, have pledged that meeting demand for criticial materials should not come at nature’s expense, and have set out a five-point plan for achieving nature-positive by 2030. This includes no mining or exploration in legally protected areas and achieving no net loss of biodiversity at mine sites. The commitment is guided by the Global Biodiversity Framework.

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